Member-only co-operative credit societies remain eligible for section 80P deduction when they are not co-operative banks.

A co-operative credit society that provides credit facilities only to its members remains eligible for deduction under section 80P(2)(a)(i) where it is not a co-operative bank. Section 80P(4) excludes co-operative banks from the deduction regime, and the conditions for treating the assessee as a primary co-operative bank were not established. On the facts recorded, the society dealt only with its members, so its income continued to arise from the eligible activity of providing credit facilities to members. The Revenue's objection under section 80P(4) was rejected and the appellate relief allowing the deduction was sustained.

---

---

Issues: Whether a co-operative credit society engaged in providing credit facilities only to its members, and not being a co-operative bank, is entitled to deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961 in view of section 80P(4).

Analysis: The assessee was found to be a co-operative society providing credit facilities to its members and not a co-operative bank. Section 80P(4) excludes only co-operative banks from the deduction regime, and the conditions for treating the assessee as a primary co-operative bank were not established. The record also showed that the assessee dealt only with its members, so the income remained attributable to the eligible activity of providing credit facilities to members.

Conclusion: The assessee was entitled to deduction under section 80P(2)(a)(i), and the Revenue's objection based on section 80P(4) was rejected.

Final Conclusion: The appellate relief granted by the first appellate authority was sustained and the Revenue's appeal failed.

Ratio Decidendi: A co-operative credit society that provides credit facilities only to its members is not hit by the exclusion for co-operative banks under section 80P(4) and remains eligible for deduction under section 80P(2)(a)(i).

---